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HOT TOPIC Chinese stock market

imirza

Contributor
Jul 29, 2007
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I notice a lot of financial commentators are referring to the Chinese stock market as a 'bubble' and comparing it to the Nasdaq of 1999. Not too long ago Goldman Sachs and a few other Wall Street firms came out with a sell rating on China citing excessive valuation or something to that extent. I however believe the Chinese stock market will continue moving higher possibly doubling or more in the next 12 months. I remember when people were screaming bubble back in 2003-04 when the US real estate prices were rocketing. The RE market surged even higher in 2005 on the back of this. Infact by mid to late 2005, a lot of those people who were screaming 'real estate bubble' were busy concocting reasons to justify the RE growth citing solid fundamentals and other reasons which ultimately proved false.

I don't believe a bubble is a bubble until even the most die hard critics join in and agree the excessive price rise is justified . Happened back in late 1999 early 2000 with the Nasdaq when everyone tried to offer a rational explanation for the price increase.
I believe this will happen with the Chinese stock market as people currently screaming 'bubble' will probably join in the next 12 months and agree the price rise is based on solid fundamentals :hurray:

When I start hearing of seminars titled ' How to make money in Chinese stocks' , when I start seeing books titled " Shanghai Composite 100,000" at the local Barnes and Nobles and when my neighbours and people I meet at cocktail parties start talking to me about how much money they are making in Chinese stocks, then that will be the time to sell China. Not before.
 

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T

TheGreatBear

Guest
I'm betting on a sharp fall after the Olypmics. There might be a correction now or then in between though...
*Offers imirza another glass of champagne*
 

MJ DeMarco

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When I start hearing of seminars titled ' How to make money in Chinese stocks' , when I start seeing books titled " Shanghai Composite 100,000" at the local Barnes and Nobles and when my neighbours and people I meet at cocktail parties start talking to me about how much money they are making in Chinese stocks, then that will be the time to sell China. Not before.
I true sell signal. Dumb money always shows up at the end!:chatter:
 

MJ DeMarco

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china

New Contributor
Sep 27, 2007
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Isn't this sort of an "apples and oranges" comparison? How do the Nasdaq and USA homebuilders compare to Japan's bubble market that lasted over many more years?

Charts are pretty to look at, but all I can deduce from this chart is that "things go up in a bubble" and "US homebuilders and the Nasdaq had similar runs."

There are also some people who think that the Naz is going to continue to fall and that we are merely taking a pause in falling (the dead cat bounce).

Anyway, I don't think you can time the Shanghai index according to the Nasdaq composite index or the homebuilders index.
 

piranha526

Contributor
Aug 20, 2007
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Isn't this sort of an "apples and oranges" comparison? How do the Nasdaq and USA homebuilders compare to Japan's bubble market that lasted over many more years?

Charts are pretty to look at, but all I can deduce from this chart is that "things go up in a bubble" and "US homebuilders and the Nasdaq had similar runs."

There are also some people who think that the Naz is going to continue to fall and that we are merely taking a pause in falling (the dead cat bounce).

Anyway, I don't think you can time the Shanghai index according to the Nasdaq composite index or the homebuilders index.
I’ll start by saying one thing: I am not trying to throw punches here BUT:
What you just said shows your lack of understanding of markets in general. US in 2000, US in 1987, US in 1929, US in 1800's, China, UK, Holland in the 1600’s: It’s all human psychology.

Patterns repeat because humans will never change. Markets are markets, whether you trade stocks, commodities, forex, trade in the US, trade in China, etc…

No one is trying to time the market but history does show us that bubbles don’t rise and fall so quickly. That’s all!

The NASDAQ and China markets have everything in common: HUMANS TRADE THEM! HUMANS WILL NEVER CHANGE, EVER!

MJ, we can deduce that the bubble most likely has legs. That’s all. CONTINUE TO TRADE THE TREND and don’t try to pick a top. When it reverses, you will know – then get off the trend. That’s all – no predictions here!
 

china

New Contributor
Sep 27, 2007
95
9
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Los Angeles, CA
No one is trying to time the market but history does show us that bubbles don’t rise and fall so quickly. That’s all!

<snip>

MJ, we can deduce that the bubble most likely has legs. That’s all. CONTINUE TO TRADE THE TREND and don’t try to pick a top. When it reverses, you will know – then get off the trend. That’s all – no predictions here!
I think that was pretty much what I was trying to say. You can't make timing predictions based on charts like these.

One question for you: How can Americans buy stocked listed on the Shanghei stock market? Most Chinese stocks listed here in the US are on the Nasdaq market.
 
T

TheGreatBear

Guest
Looks like the Chinese market might correct now...
No time to post a chart sorry.
 
T

TheGreatBear

Guest
EDIT: It is at the 50 day MA though it looks heavy, who knows.
 
T

TheGreatBear

Guest
I posted at open, Shanghai indices were down 70-90 points, now its down 271 at close.
Sliced thru support like fruitcake. Seems like a correction is coming.
 

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TheGreatBear

Guest
CAF and FXI are showing topping patterns as well...
I don't think we have seen the top yet, I believe this is still a correction for Chinese markets, but what do I know. I'll see what the market does...
So far US markets have been weak, S&P slicing thru 200 day MA so I'll predict more blood for Shanghai tomorrow if things don't turn around.
 
T

TheGreatBear

Guest
Frightening CPI numbers but Chinese market stabilizes and heads up today... Hmm...
 
T

TheGreatBear

Guest
20% correction in 2 months, volume shrank and expanded now on accumulation. All-in.
 
T

TheGreatBear

Guest
Bank reserve ratios increased, stocks gap down at open but close very strong. The bull trend continues.
 
T

TheGreatBear

Guest
Inflation hits new highs. Strong accumulation in indices plus poor sentiment. US markets stabilizing. So.. still bullish for now I think.
 
T

TheGreatBear

Guest
US markets look solid, rates were hiked again for the 6th time in China and Shanghai continued a strong gain, after a brief gap down. Bullish all the way.
 
T

TheGreatBear

Guest
Somehow, this chart doesn't bode well to me. I feel like selling stocks, they're nearing resistance and world markets appear weak. I'll sell half(heavy in mining, gold stocks etc) and maybe look for other better stocks. This just doesn't feel right to me.
 
T

TheGreatBear

Guest
Cleared out. The selloff in the Western markets is finally hitting Chinese markets. I wish stock index futures were out now... This is like seeing a load of money but being unable to get it.
 
T

TheGreatBear

Guest
Reserve requirement ratio raised by 0.5%.
Every time this happened in the past, the market would gap down at open and move up strongly.
Today, the market gapped down, moved up but has been selling off for the last 2 hours it is currently testing 50 day MA and down 2.3% with no end to the selling in sight.
 

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TheGreatBear

Guest
This looks like a buy to me. All in. I'm betting this is a correction and the Chinese market is still in a bull market.
Maybe I'm wrong, but if I'm right, some of these stocks are at 200 day MA, and will rise a lot in the coming months.
 
T

TheGreatBear

Guest
Bounces appear to be weak. I believe it is still bullish, though of course the Western slowdown will affect China sometime, it won't be now. That's my bet. I've probably have an over 50% chance of being right(most corrections in a bull market aren't followed by a bear market AND the Shanghai index dropped like 18% in 6 days AND I have a 12% profit cushion already) and a huge upside if I'm right and limited downside if I'm wrong.
 
T

TheGreatBear

Guest
I will withdraw my bullish stance as newspaper polls show market participants to be bullish (read: hopeful). I will be selling off my stakes tomorrow.
 
OP
OP
imirza

imirza

Contributor
Jul 29, 2007
227
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98
Use FXP if you are bearish on China. FXP is the 2x inverse of FXI. The biggest holdings in FXI are
CHL 11.43%
PTR 8%
LFC 7.92%
SNP 4.28%

So essentially you are betting that these stocks get their heads blown of with a decline in the Chinese markets. Not a bad bet if you ask.
 
T

TheGreatBear

Guest
Lol, I was right. SHANGHAI BREAKS PREVIOUS LOWS! *licks chops*
 
T

TheGreatBear

Guest
Well. I will revise my outlook to neutral. shanghai hovering near lows but strength in the West may prop it up. It is also near former support. Under such oversoldness, it is unwise to stay overly bearish.
Shanghai 4363 now.
 
T

TheGreatBear

Guest
Shanghai 4227 now. Lol, I was wrong. I thought bounce in western markets would push it up.
I suppose we'll see where this closes. I'm hoping for a bear market, though I have no way to take advantage of it.(You can't short stocks in China, no stock index futures though they have been promised for like 2 years already)
So I guess I'll sit back, buy soybeans or gold on dips and etc. Shanghai stocks look like poison now.(Of course being a trader, my stance and positions can shift overnight. I'll notify before I shift though.)
 

Edge

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Sep 20, 2007
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Is the storm shifting you towards a bearish bias on China? I'm reading predictions of some prettty serious impacts to GDP.
 

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